VW’s Skoda Sees New Cars Countering Europe Drop for Gains

Skoda Auto's Chief Executive Officer Winfried Vahland said, “As soon as the full volumes of the Octavia and the Spaceback will be available, the tide should continue to turn.” Photographer: Martin Divisek/Bloomberg

March 20 (Bloomberg) -- Volkswagen AG’s Czech brand Skoda
said it’s “fundamentally” confident that 2013 deliveries will
rise as the introduction of a new Octavia small car version and
Spaceback hatchback more than offsets a drop in European demand.

The first quarter and probably the entire first half will
be “somewhat” weaker than a year earlier because of the
contraction in Skoda Auto’s main European markets and the
transition to the new Octavia, Chief Executive Officer Winfried
Vahland said today at a press conference in the division’s home
city of Mlada Boleslav. The next quarter looks “better” than
the current one, and growth should continue to enable full
production capacity, he said.

“As soon as the full volumes of the Octavia and the
Spaceback will be available, the tide should continue to turn,”
Vahland said.

Industrywide European car registrations dropped 10 percent
from a year earlier to 829,359 vehicles in February, dragging
the two-month figure down 9.3 percent to 1.75 million autos, the
Brussels-based European Automobile Manufacturers’ Association,
or ACEA, said yesterday. Wolfsburg, Germany-based Volkswagen,
the region’s biggest carmaker, is among vehicle manufacturers
predicting that annual earnings won’t rise as the market shrinks
a sixth consecutive year.

Skoda, which Volkswagen acquired shortly after the fall of
communism in the then-Czechoslovakia in 1989, is “on course”
to fulfill its 2018 growth target to at least 1.5 million annual
deliveries, Vahland said. That compares with 939,200 cars and
sport-utility vehicles sold in 2012, a gain of 6.8 percent.

Eight Vehicles

Eight new or refurbished models will come out this year and
Skoda will completely revamp its line-up by 2015, Vahland
reiterated today. The division also plans to add an SUV in
coming years that’s bigger than its current Yeti model, he said.
The Octavia entered showrooms in November, and the Spaceback is
scheduled to go on sale by the fourth quarter.

The roll-outs are the “right recipe” against shrinking
European demand, the CEO said.

The division’s strategy is part of VW’s plan to overtake
Toyota Motor Corp. and General Motors Co. as the world’s biggest
carmaker by 2018.

Russia, China and western Europe should be the biggest
markets for the new SUV, Vahland said. Skoda hasn’t decided yet
on a production site for the model, he said. In addition to the
brand’s plants in the Czech Republic, Skoda also produces cars
in Russia, India and China, including at factories in
partnership with Volkswagen.

Skoda’s operating profit fell 4.2 percent to 712 million
euros ($916 million) last year. Revenue rose 1.7 percent to 10.4
billion euros. Its global sales in February declined 6.9 percent
to 67,100 vehicles, the division said on March 14. The brand’s
European car sales dropped 12 percent last month, according to
the ACEA.